Going Global With Supplier Data — A Conversation with D&B (Part 4)

In the first three posts in this series (Part 1, Part 2 and Part 3), I provided background on the numerous ways D&B is pursuing a global data strategy in emerging markets like China. In my conversation with D&B, the venerable data provider made it clear that what they shared was not specific to supplier information alone, but rather to their broader global data strategy. Still, for this venue, we all know what information matters most to us. And it's on this point that I still believe that the major players in the industry still have a long way to go to become authoritative sources for global supplier information.

That said, based on the quality of the data provided and D&B's ability to offer an easily integrated and more globally available service to companies, D&B may be closer overall than others in breadth and reach at this point. Our research into how procurement, finance and supply chain organizations are using -- and plan to use -- global data suggests that companies in the process of building global supply risk strategies outside the US based on third-party information are still turning to multiple sources because they don't believe a single provider can give them exactly what they need. Companies that build their own global supply chain based on information from multiple sources, however, run the risk of introducing misinformation into their end-to-end processes and will lose out on D&B's ability to help in a more seamless global expansion.

Our recent interviews around the D&B user base among procurement organizations suggest a continued belief -- which I see based in part on historic interactions -- that the further you get away from large Western companies, the less valuable third-party rating information becomes. My own interactions with procurement and finance managers and directors tasked with developing global supply risk strategies suggests that those furthest along in their efforts are looking to multiple providers (e.g., D&B and other competitors, receivables insurance companies who also sell supplier information, etc.) as they build their strategies. Parts of these efforts often involve investigating new sources of supplier information from trade/customs sources that track cargo shipments and import/export records like Panjiva. Though few are actually using information in this way yet, there's curiosity around it. Clarke's take is that one of the singular advantages D&B offers customers is the recognition that there will always be new sources of information and ways to apply it to business decisions. D&B's value comes from its ability to help manufacturers build end-to-end enterprise information strategies that incorporate D&B data, data from the rest of the world -- and data proprietary to the customer's business and industry.

Candidly, the great majority of companies considering global supply risk strategies aren't yet leveraging any type of third-party information on a regular basis at this point in time. The fact that D&B is building a global strategy here is great, from a procurement approach, they are well ahead of where 90% of their potential procurement customers stand in the market. And among those 10% who are more advanced and actively pursuing some type of supply risk strategy on a global basis beyond ad-hoc inquiries and look-ups, many are focusing far more in developing on-the-ground relationships and supplier performance monitoring to manage risk at larger suppliers rather than relying on third-party information in any capacity.

Because of this, it's my hypothesis that D&B will face as much of a sales challenge in convincing users to rely on its global supplier information on a consistent basis -- especially in developing markets -- as it will in gathering and building a global database of supply risk information in the first place. They may be the first to market with a truly global supplier database that includes predictive risk indicators with tens or hundreds of millions of suppliers -- and heck, the information might be significantly more accurate and predictive than we anticipate developing market information could be -- but having the capabilities and insight versus convincing the market of accuracy and potential use may prove to be two very different things.

Moreover, our recent end-user discussions suggest it would be very beneficial for D&B to continue to invest in a sales and go-to-market effort that trains and educates its own extended commercial organization about the capabilities it has within its supply management solutions content and technologies today. Continuing to work with and embrace both domestic and global content channel strategies with the likes of Ariba and others will also be essential here as well. It's clear that if D&B can create an integrated global solution aimed at buy-side organizations -- and they can convince and educate the market of their capabilities -- they'll have a huge competitive advantage in a global supply risk game built on scale more than anything else.